Sillicon Alley Insider - Dan Frommer | August 22, 2008 6:45 PM

Barack Obama plans to announce his VP pick via email and text message, perhaps as soon as this weekend. Great stunt. How much will it cost?

Sending out a bulk email won’t cost Obama much, and it will be free for anyone who gets it in their inbox. But as anyone who’s sent or received a text message knows, the wireless business doesn’t give those away.

Estimating how much Obama spends — and how much the U.S. mobile business will receive — depends on a few factors: How many people have signed up to receive the message; what percentage of those people pay for bulk text-message plans; and how much Obama’s campaign pays to send out its bulk messages. But via a combination of guesswork and homework, we figure that the VP announcement could generate as much as $3 million for the U.S. wireless business, split evenly between Obama’s campaign and his supporters. (Full assumptions and math below.)

No matter what the cost, Obama’s getting his money’s worth: A mailing list full of devotees he can send more messages to, like “VOTE!” on election day — and lots of buzz.

Number of people signed up	Total Spend (if Obama pays 5¢/message)	Total Spend (if Obama pays 10¢/message)

.	100,000	$45,000	$60,000
.	500,000	$225,000	$300,000
.	1,000,000	$450,000	$600,000
.	5,000,000	$2,250,000	$3,000,000

Our assumptions:

We’ve gone ahead and made a variety of assumptions and run them through a handful of scenarios. Some of the data — like the number of people signed up to receive the message — is a flat-out guess, which is why we’ve provided a number of ranges. But industry sources have provided us with decent numbers on text message pricing.

We assume that Obama’s campaign will pay a text message aggregator between 5 cents and 10 cents per person for each message it sends. Aggegators buy text message capacity from carriers in bulk and resell it to organizations like Obama’s. We’re told that 5 cents per message is a ridiculously good deal that the aggregator would basically be providing at no profit — something many companies would probably do just to say they handled Obama’s text message campaign. 10 cents per message, per person would be a decent deal. We’re ignoring any monthly retainer that Obama’s campaign pays the aggregator for their services.

We assume that 50% of Obama’s recipients will have to spend $0.20 to send/receive the text messages, or an average $0.10 per person. comScore M:Metrics estimates that about 34% of U.S. wireless subscribers pay for a monthly bulk text message plan. Those people are essentially getting the message for free. The remainder of wireless subscribers have to pay a “casual” messaging fee, which we think runs around $0.20 per message. But Obama’s audience skews young and tech-savvy, and the ones who sign up for a VP text message are even more so. So we’re assuming that half of his recipients are have a bulk plan and are getting it for free — meaning the average cost is ten cents per person.

We assume that the entire transaction generates a minimum of 6 charges: 3 for Obama, 3 for the recipient. In order to receive the Obama message, supporters have to send his campaign a message (VP to 62262 or OBAMA). Then he will send a confirmation message back. Then he’ll send out the actual update. Each one of those messages generates a charge for both sides. We’re assuming it costs Obama the same amount to send and receive a message.

We don’t know how many people have signed up for the message. This is the most important variable, but the one we have the least insight into. Presumably at some point in the campaign, perhaps as soon as this weekend, we’ll hear how many message were sent out, and we can revisit our math again.

source: SAI

This entry was posted on Saturday, August 23rd, 2008 at 4:25 pm and is filed under Internet Business, Net Advertizer, Social Network, Tech News, Web Tech. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.